After the tariffs, container freight rates rose slightly against the trend
After China and the United States imposed tariffs on each other crazly, the negative consequences of the "plummeting" freight rates predicted by the market did not immediately manifest. Instead, a "slight increase against the trend" has become the current situation of freight rates on the Trans-Pacific route.
According to Drewry, the World Container Freight Index (WCI) for the Shanghai-Los Angeles route reached $2,713 per FEU last week, rising by 5% compared with the previous week. The freight rate from Shanghai to New York is 3,646 US dollars per FEU, increasing by 4% compared with the previous period.
The Shanghai Containerized Freight Index (SCFI) indicates that the weekly rate of the Shanghai-US West Coast port route reached $2,347 per FEU, rising by 3% compared with the previous week. The freight rate for the route from Shanghai to ports on the east coast of the United States reached 3,335 US dollars per FEU, rising by 1.5% compared with the previous period.
The above results are not the natural flow of the market. The voluntary reduction of capacity and air travel by major shipping alliances is becoming a tried-and-true panacea for market rescue.
At the end of March, that is, before the outbreak of the trade war, the overall plan of shipping companies was to achieve a year-on-year increase of 17.0% in the capacity of the Asia-North America West Coast route. As for the route from Asia to the east coast of North America, before the trade war, the plan of shipping companies was to increase the capacity of this route by 10.9% year-on-year.
However, according to Delouri, from May 12 to June 15, 2025, the main east-west main routes - the Trans-Pacific, Trans-Atlantic, and Asia-Nordic and Mediterranean routes - have announced the cancellation of 58 voyages. The total number of cancelled voyages accounts for 8% of the planned 692 voyages, among which approximately 62% will be on the Trans-Pacific eastward route. 24% are on the Asia-Nordic and Mediterranean routes, and 14% are on the westbound transatlantic route.
However, judging from the current situation, the forms in which major alliances reduce their capacity are not the same: Gemini Cooperation, led by Maersk, has reduced its capacity on the Trans-Pacific route by 21% by deploying smaller vessels instead of large ones, changing the 18,000 TEU large vessels to 14,500 TEU medium-sized ones. The Ocean Alliance has cut its capacity by nearly half on the routes from Asia to the east and west coasts of the United States. Mediterranean Shipping Company has adopted some blank routes and suspended some routes. Once the demand returns to normal, it can quickly restore the current network.
Meanwhile, the situation on the Asia-Europe line seems even worse. The low-price slump that has persisted since the Spring Festival is still ongoing. The weekly decline of the WCI Shanghai-Rotterdam route was 7%, closing at $2,046 /FEU, and the weekly decline of the Shanghai-Genoa route was 4%, closing at $2,766 /FEU. The sluggish prices also spread to the transatlantic route. The Rotterdam-New York route of the WCI broke through the benchmark of $2,000, with a weekly decline of 3%, closing at $1,972 per FEU.
In terms of ports, according to the PortOptimizer platform of the Port of Los Angeles, it is expected that 19 vessels with a total capacity of 103,105 TEUs will arrive at the port from May 18th to 24th, representing a 19% increase compared to the previous period and a 56% increase compared to the same period last year. However, in the week ending May, both the number of vessels and container volumes will experience a sharp decline. Only 9 vessels will arrive at the port, carrying 46,948 TEUs of containers, a 54% decrease compared to the previous week and a 49% drop compared to the same period last year.
However, the above situation may change with the "Joint Statement on Economic and Trade Talks between China and the United States in Geneva" on May 12. In a nutshell, the United States will reduce tariffs on Chinese goods from 145% to 30% within 90 days. China will reduce the US tariff from 125% to 10% within 90 days.
During the 90-day "buffer period", it may directly stimulate the export of Chinese electronic products, mechanical manufacturing and other goods to the United States, as well as the export of American agricultural products and energy to China. The short-term surge in cargo volume may push up the spot freight rates in the shipping market. Even so, it can be foreseen that the next wave of shipments will lead to a recurrence of high freight rates, a shortage of containers and space, and port congestion. The seemingly "joyous" mutual tariff cuts will once again have an impact on the global port and shipping supply chain.
For shipping companies, when market demand is weak, cancelling some voyages and reducing the input of vessel capacity can prevent the market from falling into a vicious cycle of "oversupply - sharp drop in freight rates", which can effectively boost freight rates. Moreover, from the perspective of cost control, suspending operations can save operating costs such as fuel and port charges, and can effectively reduce losses especially during periods of low freight rates. For this reason, since the outbreak of the epidemic, shipping alliances have repeatedly adopted the form of blank shifts, effectively stabilizing the spot freight rate market.
However, from another perspective, blank shifts also have their moments of failure. Especially for the Chinese market, when there are long-term changes such as the transfer of industrial chains, the decline in structural demand, and the shrinking of cargo volume, it is very difficult for shipping alliances to reverse the freight rate market through capacity adjustments at this time. Another limitation of using this "all-purpose solution" is that it requires highly coordinated shipping alliances to break the "Prisoner's dilemma", that is, blank navigation becomes a common choice for all shipping companies, and no shipping company will operate at full capacity in order to maintain cash flow and capture the market.
But what is even more pessimistic is that the moment when the blank shift fails due to the decline in structural demand is also the moment when the entire port and shipping market will jointly face more acute challenges. However, in the face of a longer-term pessimism, shipping enterprises may enjoy a new wave of benefits under the impact of tariffs.
